Why More Businesses in 2023 Will Outsource Their Software Development to Latin America

Growth Across the Globe with Regional Centers

Organizations in Europe and the United States have been establishing hubs in Latin America to accelerate their international growth, reduce costs, and bridge any expertise gaps. This trend has been gaining momentum in recent times. Industry experts predict that Latin America will be a top tourist destination by 2023, making it a crucial region for global businesses.

Corporations have been increasingly leveraging the benefits of outsourcing their software development to Latin American companies in recent times, and experts forecast that this trend will continue to grow in the coming years. The next few years are expected to witness a significant rise in the number of organizations outsourcing their software development to Latin American firms. This surge can be attributed to the following five reasons:

Cost Savings

Reducing expenses is a priority for businesses worldwide, and outsourcing software development has emerged as a popular solution. The 2023 Global Software Outsourcing Rates guide by Accelerance offers comprehensive insights into the salaries of various technical positions across the world. It is noteworthy that Latin American countries generally offer much lower rates for software development than the North American market. For instance, developers in this region are significantly less expensive than their counterparts in the United States.

  • The hourly pay for a junior developer in the United States typically ranges from $95.91 to $101.13, whereas in Latin America it is usually between $25.91 and $35.31.
  • The cost of hiring a mid-level developer in the United States is around $120 to $127 per hour, whereas in Latin America, it costs only $35 to $45 per hour.
  • In the United States, the hourly rate for hiring a senior developer is around $140 to $148, while in Latin America, it typically ranges from $35 to $50 per hour. Read our blog on Solidity programming language.
  • There is a significant variation in the pricing for entry-level Quality Assurance positions in the US and Latin America.
  • Mid-level Quality Assurance analysts in the United States can cost anywhere between $90 and $95 per hour, compared to Latin America where the hourly rates are typically between $30 and $40.
  • In the United States, the hourly rate for hiring a QA specialist ranges from $130 to $154, while in Latin America, it typically ranges from $35 to $45 per hour.

Optimizing expenses can be achieved by investing in Latin American developers since they are capable of offering quality services at competitive rates. This makes it a viable option for companies seeking ways to reduce costs. Read our blog on engaging an enterprise IT service provider.

Convenient to Use

Latin American nations possess a distinct advantage over their Asian counterparts due to their collaboration with the United States. Working together is effortless since the Americas are not separated by time zones, allowing US businesses to collaborate with developers in Latin America without the need to adjust their schedules. In addition, there is a cultural compatibility advantage; Latin American nations share many similarities with their North American neighbors in terms of working etiquette, resulting in fewer cultural barriers. Moreover, according to a Deloitte study on outsourcing, Latin American governments actively encourage free trade and provide English language assistance programs to attract global service providers and businesses.

Positive Trend – Growing Confidence in the Area

According to a Deloitte outsourcing survey, 78% of participants expressed satisfaction with their outsourcing partnerships, and corporate leaders have plans to increase their outsourcing levels by 14% to 36%. Deloitte’s research has also revealed that Latin American countries are becoming regional powerhouses, with growing demand from the US outsource market for firms in the Latin American region. This indicates the increasing confidence of these firms to support the growth of US businesses.

Proximity Advantage

For many corporations, it is more convenient to travel to Latin American locations to meet with their outsourcing partners than those in Asia. The growing outsourcing market in Latin America, which is on the same time zone as the rest of the Americas, is a contributing factor to this advantage according to Eduardo Araujo, Vice President and General Manager of HP Enterprise Services. This enables businesses in America to benefit from round-the-clock services from developers in Latin America, fostering a close working relationship.

Strong Foundations

Buenos Aires and Santiago are among the most significant cities in Latin America, and they offer robust infrastructures making them desirable outsourcing partners. With high dependence on telephone and online communication, it is critical to collaborate with businesses located in areas with reliable and consistently fast internet access.

Businesses of all sizes have realized the advantages of outsourcing software development to companies in Latin America, and this trend is expected to continue in the coming years. The region has a reputation for accommodating businesses, delivering quality work, and offering competitive prices. As such, we anticipate more partnerships between businesses and outsourcing firms in Latin America. Read our blog on the benefits and drawbacks of developing software internally versus outsourcing.

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